Apprentice true cost calculator

The wage on an apprentice's payslip is the smallest part of the real story. Employer National Insurance, a contribution towards training costs, and the paid hours spent training rather than working all sit on top of it — and the second and third of those are frequently smaller than employers expect, once the actual rules are worked through.

The NI exemption most employers don't realise applies

Apprentices under 25 attract zero employer National Insurance on earnings up to £50,270 a year — the same higher earnings threshold used for under-21s generally. For a typical apprentice wage, that means employer NI on the payslip is genuinely nil, not just discounted. Apprentices 25 or over don't get this exemption and are charged the standard rate above the normal secondary threshold, the same as any other employee.

Training cost and off-the-job time

Apprenticeship training has a funding band cost, set per standard, which government funding can cover in full or in part depending on employer size and the apprentice's age — small employers taking on 16-18 year olds are often funded in full; other arrangements typically see the employer cover a 5% co-investment share. Separately, apprentices must spend at least 20% of contracted hours on off-the-job training — paid time that doesn't produce billable work, which is why cost per productive hour runs higher than the headline wage rate suggests.

A worked example

A 19-year-old apprentice on £14,000 a year, fully funded £9,000 training, 20% off-the-job training, 1,872 contracted hours: employer NI is £0 (under the threshold), training contribution is £0 (fully funded), so total annual cost is £14,000 — but only 1,497.6 hours are productive. That works out to roughly £9.35 per productive hour, well above the £7.48 the raw wage alone would suggest.

What this isn't

This doesn't include the Apprenticeship Levy itself, which only applies to employers with an annual pay bill above £3 million — most trades businesses never pay it directly. It also doesn't cover Employment Allowance, which can offset employer NI for eligible small employers regardless of apprentice age, or the specific funding band for a given apprenticeship standard, which should always be checked on gov.uk rather than assumed.